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Free Electrons' Co-Founder Sees Prospect of Utilities Going Global

Transforming electric utilities into global brands may seem a far-fetched proposition. That's just what some industry executives believe can, and will inevitably, transpire, however.

Created by an international consortium of eight utilities, Free Electrons is in the midst of its second, global utility-startup technology accelerator program. Over the course of four, one-week technology acceleration modules conducted in various cities around the world, 15 start-up program finalists will work alongside utility veterans with the aim of further developing and refining their technology to the point where it can be tested in the field with one of Free Electrons' utility co-founders. They'll vie for a first prize worth USD200,000, no strings attached.

Contracts will be signed, money will change hands and pilot projects tested in the field, opening the doors to opportunities every start-up dreams about. The utilities gain by identifying start-ups worldwide at an early stage of developing promising technological innovations, then working closely with them to test, prove and, if all goes well, deploy their tech, potentially at utility-scale, in the real world.

What's in a name?

“Making the decision to name this venture Free Electrons says a lot about our common view regarding the evolution of power and energy worldwide,” explained Executive Board member Luis Manuel, executive director of Portugal's EDP Innovation, one of the utilities that co-founded Free Electrons.

Manuel highlighted the pivotal, driving role new, digital, low- and zero-carbon power technologies are playing and will play as power industry and markets evolve in an interview.

“Electrons as a commodity, and as a commodity business, will tend to lose value over time. In order to add value for our shareholders we need to develop new business models and new services. Almost certainly, they will revolve around digital data management and data analytics,” Manuel told Energy Central.

Portugal's largest power utility and energy services group, EDP early on realized the makings of a fundamental transformation was taking root and growing in power and energy markets and industry worldwide. EDP in the 1990's embarked on a process of driven by internationalization, deregulation and privatization, Manuel elaborated.

“Perhaps the most interesting element of EDP as a utility is that it is becoming a major, renewable energy power producer,” Manuel said.

That began with investing in, owning and operating onshore wind farms in Portugal. Today, EDP is the fourth largest wind power producer in the world and the third largest in the US, he pointed out.

Digital utility innovation internationalization

Furthermore, over the past decade renewable power production has grown from virtually zero to the point that it now accounts for 40 percent of EDP's EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization). It's by far the largest, single contributor to the group's revenues and earnings.

The Portuguese utility is in the midst of expanding in the offshore segment of the wind power market. It's developing offshore wind farms in the UK, France and at an early stage in the US, Manuel continued.

EDP Innovation, EDP's new energy R&D and venture capital arm, is another facet of the utility's intention to capitalize and add momentum to the energy decentralization, digitization and "decarbonization" trend.

“EDP realized the future [of energy] will be a lot more decentralized and digital and that it did not have all that was needed to move forward in that direction, so we began to invest in and partner with companies that have those tools,” Manuel said.

Innovative distributed, clean energy technologies and promising start-ups are cropping up all around the world, in developing and developed markets alike, Manuel noted. That prompted EDP executives to cast a wide, global net in their search for new technologies, business partners and promising start-ups.

A unique, global utility partnership

EDP quickly found that other utilities around the world were taking the same view of where power and energy industry and markets were headed. That led to the creation of Free Electrons by EDP and seven other utilities.

The co-founders of the distributed energy technology accelerator program, which has since expanded to 10, were:

Ausnet Services and Origin (Australia),

DEWA (Dubai),

EDP (Portugal),

ESB (Ireland),

Innogy (Germany),

SP (Singapore) and

Tepco (Japan).

All told, Free Electrons utility partners could extend the reach of program start-ups to a customer base of some 73 million across 40 countries.

“Technological innovation can be found all around the world, and that's true of creation of new business models, as well. Utilities need to open up to the world,” Manuel said.

“We believe that the global nature of the [Free Electrons] program is relatively unique in the utility industry. Historically, utilities have developed as local businesses. EDP is present in 14 countries today, but I'd say we're far from being significantly multinational.

"I don't think you would be able to find one utility in the world that can offer a strong presence and background across a diversified, multinational market base. Technological innovation, on the other hand, is occurring globally. Aligning EDP and our utility project partners with that is what Free Electrons is all about.”

Free Electrons' utility companies signed USD2 million worth of contracts and one project partnership with start-ups as a result of the inaugural power tech innovation accelerator program, which took place between May and September 2017. Program participants passed through San Francisco, Lisbon and Dublin before the program drew to its close in Singapore. Another $12 million worth is under development. “Some will materialize, others won't,” Manuel commented.

Portuguese BeOn, the vendor of integrated “plug and play” solar kits that include a proprietary micro-inverter, earned first prize. The start-up signed several agreements with program utilities in addition to taking home a USD175,000 cash award.

Scanning the globe for promising digital, clean energy innovations

Illustrating the multinational, global nature of the accelerator program, a total of 515 distributed energy start-ups from 60 countries submitted applications for Free Electrons' second annual program. Thirty were selected to participate in a second-round, “boot camp” phase. Based on their performance 15 were selected to participate in the program's third, culminating phase.

Those 15 just recently completed the first module of that third phase, which took place in Australia. “We've committed to contractual relationships and we've started to design pilot projects – those are really the first results of the module in Australia,” Manuel said.

Each Free Electrons' utility is now focusing on developing a single pilot project with one or more start-ups. The second, third-phase module is set to begin in San Francisco, California. “Fifteen [pilot projects] signed and planned in Australia are under way. Opportunities for each start-up to develop additional pilot projects are opening up as we reach San Francisco,” Manuel explained.

Project presentations for each of the pilots cap Free Electrons accelerator program. They're to be made during the week program participants convene in San Francisco June 24-29 for the program's final module.

From that point on, each of Free Electrons' utilities will be free to partner and develop projects with as many start-ups as they want to. EDP wound up working with five program start-ups from a cohort of 12 during last year's program. That included Israel's Aperio, developer of innovative, industrial cyber-threat detection and cyber-security software that went on to raise seed capital from EDP and venture capital investors.

As for this year's program: “We elected to work with one during the Australia and Silicon Valley modules, but we think we can do something with a least seven.”

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